Contracts have been awarded for the Edinburgh to Glasgow improvement programme (Egip), which has risen in cost from £650m to £741.5m.
Much of the extra money will be spent lengthening platforms at Queen Street for longer trains to meet passenger demand and integrating the station with Buchanan Galleries shopping centre.
Egip was announced in 2009 to improve reliability, capacity and journey times between Scotland’s two biggest cities.
The Queen Street redevelopment, which has more than doubled in price from £49m to £120m, is not expected to contribute to cutting journey times, but will add to the “accessibility and ambiance” of the station and wider public realm, according to a full business case by consultants Ernst & Young.
The cost of electrifying the line via Falkirk to make trains faster has been cut by a fifth to £248m. Land, infrastructure and contingency costs have also been adjusted.
Transport minister Keith Brown said: “I welcome the contract award on the core electrification of the route and the hundreds of jobs this will support.
“This announcement represents another hugely important milestone in the delivery of Egip and shows that we are pressing ahead with the improvements which will give Scotland a railway fit for the future.
“Passengers will experience the benefits of a faster, more comfortable and more efficient railway. But the whole of Scotland will also enjoy the boost to our economy and environment.
“Since I announced the first phase of Egip in July 2012, we have further developed the original scope to include an even greater transformation of Glasgow Queen Street station and I am pleased to announce the publication of the Egip business case which takes that into account.
“This prudent and comprehensive assessment of the investment case for Egip demonstrates substantial benefit for Scotland and its rail users, and that the first phase can be delivered on time and on budget.”
Egip was a key transport priority in the SNP’s manifesto for government in 2011, which pledged to deliver “services of just over half an hour” at a cost of about £1 billion.
Mr Brown hailed “hundreds of millions of savings for the public purse” when the cost was cut to £650m in a 2012 strategic review, which recommended a phased introduction of reduced journey times to make Egip’s goals “more affordable and achievable”.
Journeys of at least 42 minutes, rising to 44 minutes at peak time, are now expected by 2019 and shorter 37-minute journeys are expected by 2025, according to the full business case.
Labour transport spokesman Mark Griffin said: “While the publication of this business case is better late than never, I am still baffled as to how Keith Brown can claim this project is ‘on track’ and ‘charging ahead’ when it has been delayed and scaled back almost beyond recognition.”
And Conservative transport spokesman Alex Johnstone said: “The Scottish Government has already scaled back on their original plans for Egip.
“Now, we find the costs rising to almost three-quarters of a billion pounds for a project completely lacking in ambition.
“For frustrated passengers, the prospect of having to wait almost a decade for real reductions in journey times – on what is supposed to be Scotland’s flagship rail service – is a real blow.”